Should you run from risk?

Sarah Gardner: OK, OK. Enough Europe-bashing for one show. Besides, here in the U.S. we don't have that much to crow about right now. We're a country that's always admired risk-taking and the people who do it -- entrepreneurs, investors, even high-stakes "gamblers" in Vegas, if we're honest about it.

But lately we've been backing away from all this chance-taking. Whether it's investing in the stock market, leaving a job we hate or starting a new business...we're gun shy right now. But Marketplace's Chris Farrell says it's how you take risks that makes all the difference.

Chris Farrell: When I think about the words "financial security," the first thing that comes to mind is a quip from humorist Will Rogers during the Great Depression. He said, "I'm more concerned with the return of my money than the return on my money."

Eight decades later, his remark could be the catchphrase of the moment. It seems as if everyone -- OK, the 99 percent -- are trying to insure their financial security by racing from risk.

After all, the financial cataclysm vaporized nearly two decades of wealth. Europe's never-ending crisis is taking down the global economy. Trust in leaders is lacking. And who doesn't worry that they could get handed a pink slip, joining the more than 23 million unemployed and underemployed workers? Cash is king. Debt is a four-letter word. Stocks are too volatile. Financial security is all the rage.

The retreat from risk is understandable. But it's wrong. You can't escape risk. Life, after all, is risky. Every time you cross the street, you take a risk. The same holds when you buy stocks, have a child, take a job.

What matters is how you manage risk. Figure out what risk you want to embrace. Decide what risk to shun. It's all about weighing the trade-offs. For example, a college diploma doesn't pay off for all graduates. However, the odds of a good career and better financial security over a lifetime are much higher with one. The way to reduce risk isn't to avoid college; it's limiting how much you borrow for the degree.

The same holds with your emergency fund. Yes, it's smart to save. Everyone needs a margin of safety against setbacks. But don't forget that the money is also your "opportunity fund," the savings to tap when an intriguing investment comes your way or it's time for a lifestyle change.

You don't know what will happen. You can't get rid of the uncertainty. What you can do is steer between the Scylla of fear and Charybdis of greed by thinking though trade-offs and managing risks, tools and insights for creating real financial security.

Chris Farrell is economics editor of Marketplace Money, a nationally syndicated one-hour weekly personal finance show produced by American Public Media. Chris is also economics correspondent for Marketplace, the largest business program in broadcasting and chief economics correspondent for...